Tax Accountant or Monthly Bookkeeping?


4

Given that it is tax time how should you pay an accountant?

Do you do your own bookkeeping and just work with a CPA firm to do your taxes or do you have a CPA firm on monthly retainer to make sure things are good throughout the year?

Bootstrapped Tax

asked Jan 12 '10 at 08:43
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User2227
41 points

5 Answers


3

We do our own bookkeeping (using QuickBooks). We also do state and city taxes, payroll and related forms 940, 941, W3 and W2 as well as forms 1096/1099 ourselves.

We use the accountant for Form 1120S (US Income Tax Return for an S Corporation).

At the end of the year I give our accountant an electronic copy of the data and go over the numbers in a meeting and she prepares the form.

If there are any questions or issues during the year she bills us hourly.

answered Jan 12 '10 at 08:49
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Oleg Barshay
2,091 points
  • we're doing the same thing. – Tim J 14 years ago
  • I think that makes sense, thanks for the input. – User2227 14 years ago

2

I do not think it makes sense for a startup to pay a retainer fee to an accountant, I think the best structure is to pay them for year end taxes and per hour throughout the year.

Thanks everyone.

answered Jan 15 '10 at 04:30
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User2227
41 points

2

Number 1 lesson I have learned over my career in startups - if you are a founder or head of operation (that is what I do for a living), do books as much as you can yourself. Number 1a lesson - as a founder, don't delegate signing checks to anyone until you are 200-300 employee company.

Approach I have taken before was to run the books myself and at least every quarter have a CPA audit your books. Once the company is large enough to have a full-time bookkeeper, than I would still look over every morning transactions from the day before.

I strongly believe you loose control of your business the moment you loose clear sight of your books.

answered Jan 12 '10 at 10:02
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Apollo Sinkevicius
3,323 points
  • I have to disagree here. I haven't managed the day-to-day books for several years, and I wouldn't say that I've lost control of my business. I have a part time bookkeeper who processes payments and sends invoices, a part time controller who closes the books each month, and a tax accountant who does my taxes each year. My finance team generates reports that I use to monitor the health of the finances, and this works fine for me. – Michael Trafton 14 years ago
  • Thank you for the comments but the heart of my question, which i think you implicitly answered, is that you do not pay a CPA firm a retainer fee. You pay them to do taxes year end and you pay them an hourly rate throughout the year (if needed)? Is that correct? – User2227 14 years ago

1

My accountant is related to me, so my situation is a little different. I keep the books myself, and send them over for review about once a quarter. At the end of the year, I send a copy of the full year's books (for personal, that's hard copy, for business, soft copy from QUickBooks) and then sit down and run through it together.

In general, though, you want to have someone review your books while you still remember the details. There's nothing so annoying as looking at a 12-month-old receipt and trying to figure out what exactly it was for because it doesn't match what's on the books.

answered Jan 12 '10 at 09:10
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Elie
4,692 points

0

If you're bootstrapped, I would think doing your own taxes and finances with the aid of some basic software should be the option you choose.

If you are involved in complex or continuous transactions or with multiple employees and payrolls that are hard to track an accountant might be of use.

Generally, you should never rely completely on an accountant to manage your finances. They should be a person who just crosses Ts and dots Is to make sure the IRS doesn't come after you, while you should always have clear macro/micro view of your numbers.

Note: The information provided above is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved. Given the changing nature of laws, rules and regulations, and the inherent hazards of electronic communication, there may be omissions or inaccuracies in the information provided. Accordingly, the information is provided with the understanding that I am not herein engaged in rendering legal or other professional advice and services. As such, it should not be used as a substitute for consultation with professional legal or other competent advisers. Before making any decision or taking any action, you should consult a professional.

answered Jan 15 '10 at 06:40
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Jesse
279 points

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